Carl M. Archer Tr. No. Three v. Tregellas, Nos. 17-0093, 17-0094, 2018 Tex. LEXIS 1153 (Tex. 2018)
Rights of first refusal (sometimes called preferential rights to purchase, or “pref rights”) are routinely found in oil and gas title, joint operating agreements, farmout agreements, and other instruments common to the industry. Even AAPL’s Model Form-610 Operating Agreement includes an optional pref right provision. Pref rights can destroy pending deals, or even unravel deals after they have already closed.
Oil and gas companies should exercise care in evaluating rights of first refusal burdening their interests or prospective interests, including analysis of the triggering conditions and notice provisions. Otherwise, as was recently illustrated in the Texas Supreme Court case, Carl M. Archer Tr. No. Three v. Tregellas, Nos. 17-0093 ~, 17-0094, 2018 Tex. LEXIS 1153 (Tex. 2018), limitations defense may not be available.Read More »